9 November 2021

The Recovery Loan Scheme: Autumn Budget Update

October’s Autumn Budget announced some key changes to the terms of the Recovery Loan Scheme.

Recovery Loan Scheme

As we explained in our previous article, The Recovery Loan Scheme: A Summary, the Recovery Loan Scheme (the “Scheme”) has been available since April 2021 for UK businesses which have been adversely affected by COVID-19. The Scheme was initially set to run until 31 December 2021.

Extension of Scheme

In his Autumn Budget on 27 October 2021, the Chancellor of the Exchequer announced that the Scheme would be extended for six months, with applications able to be made until 30 June 2022.

Changes to the Scheme

Along with the extension, various other changes to the Scheme will take effect in relation to applications and offers made on or after 1 January 2022. A comparison table of the current terms against the new terms is set out below.

  • The Scheme will only be available to small and medium sized businesses
  • The maximum amount of funding available to any business will be £2 million
  • The government’s guarantee coverage to lenders will be 70%.

We expect that further details about these changes will be published in due course.

Next steps

The changes will not affect those businesses which have already received a loan under the Scheme but if you are considering applying for the Scheme and are a large business or wish to borrow more than £2 million, it would be advisable to complete your application sooner rather than later.

Given that the Scheme was initially meant to end on 31 December 2021, the announcement may well provide an unexpected helpful boost for smaller businesses in the new year. However, given the long-lasting economic effects of the pandemic, those enterprises which will be struggling into 2022 after what has already been a very tough couple of years may not consider the extension of the Scheme to be enough to counterbalance the new restrictions.

Current terms (until 31 December 2021) New terms (effective 1 January 2022)

Scheme ends 31 December 2021

Scheme ends 30 June 2022

Available to most businesses regardless of size

Available to SMEs only

Maximum amount available: £10 million

Maximum amount available: £2 million

Government-backed guarantee to lenders: 80%

Government-backed guarantee to lenders: 70%

Rowena is a Partner in our Banking and Finance team.


This note provides a general summary of the legal position in England and Wales as at 8 November 2021. It does not constitute legal advice.

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